Shingle Enterprises is considering manufacturing a new product. It projects the cost of direct materials and rent
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Question:
Shingle Enterprises is considering manufacturing a new product. It projects the cost of direct materials and rent for a range of output as shown below.
Output in Units | Rent Expense | Direct Materials |
---|---|---|
1,000 | 7,100 | 5,680 |
2,000 | 7,100 | 10,224 |
3,000 | 11,360 | 6,000 |
4,000 | 11,360 | 8,000 |
5,000 | 11,360 | 10,000 |
6,000 | 11,360 | 12,000 |
7,000 | 11,360 | 14,000 |
8,000 | 11,360 | 16,000 |
9,000 | 14,200 | 41,606 |
10,000 | 14,200 | 49,700 |
11,000 | 14,200 | 62,480 |
1. Determine the relevant range of activity for this product.
2. Calculate the variable cost per unit within the relevant range.
3. Indicate the fixed cost within the relevant range.
Related Book For
Managerial Accounting Tools for business decision making
ISBN: 978-1118096895
6th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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